UNITED STATES - California Public Employees Retirement System has made a commitment of $300m (€201m) to Alinda Capital Partners's Infrastructure Fund II, even though the value of its earlier investments have yet to reach their original capital value.
CalPERS officials believe Alinda has a sufficiently experienced team for it to consider investing, as the firm now has two infrastructure commingled funds and have shown themselves to have a good track record in raising funds and deploying capital.
That said, CalPERS' experience of investing in infrastructure has suffered somewhat in the recent market turbulence. It first made a $100m investment in Alinda Infrastructure Fund I in May 2007 but the pension fund placed a fair market value on this investment of $74m by the end of September.
CalPERS has now committed $700m of capital into investing in infrastructure as its target allocation is 3% of its total plan assets to the end of 2010. On 20 November, 2009, the pension fund had committed $199.7bn to infrastructure.
The investment strategy for this latest commingled fund is to invest primarily in the US and Europe and in services with supporting public infrastructure, energy and industrial infrastructure, which are essential to communities, governments and businesses.
The assets will adopt the consumer price index plus 5% as its benchmark. And although no exact figures are given, CalPERS expects that the investments it makes in this asset class will generate a high return over the benchmark based on a holding period of 10 years.
CalPERS' officials are taking a long-term view on infrastructure investing which is why it is hiring a specialist infrastructure consultant next month, when officials sit down for the 14 December board meeting. The finalists are Mekata Investment Group, Pension Consulting Alliance, R.V. Kuhns & Associates and Wilshire Consulting.